Home Values Flatten as Inventory Swells

Seattle, WA, April 21, 2025-Home price growth paused and inventory swelled during what is typically one of the most competitive home shopping months of the year, according to Zillow's latest market report. That's despite mortgage rates reaching a 2025 low in March. 

"More sellers came out to test their luck as rates ticked down in March, but home sales didn't keep up. Buyers-especially first-timers without equity to pour into their down payment - continue to struggle with affordability and now are facing even higher levels of uncertainty," said Zillow chief economist Skylar Olsen. "A turbulent economy likely weighs more heavily on first-time buyers than more firmly established sellers." 

Sellers made a strong showing in March, putting more than 375,000 homes on the market-an increase of nearly 9% compared to the same time last year. While listing activity is still about 19% below a typical March before the pandemic, it's steadily rising month over month and tracking closely with seasonal trends. 

While sellers leaned on the gas, buyers didn't keep up. Newly pending sales were essentially flat compared to last year, even though average mortgage rates were lower this year-6.65% on average in March, compared to 6.82% a year before. About 265,000 listings went into a pending sale in March-110,000 fewer than came on the market.

This mismatch pushed inventory up to 1.15 million homes-19% over last year-the most inventory buyers have seen in March since 2020. Inventory now stands 24% below 2018-2019 averages for this time of year. That's a noticeable improvement from March 2023 and March 2024, when inventory was down 43% and 36%, respectively, compared to pre-pandemic levels.

With more options available, competition cooled, and home price growth slowed significantly. The typical home value rose 0.2% month over month in March, unadjusted for seasonality. That's by far the slowest growth for this time of year since at least 2018; the second-slowest was 0.7%. Still, home values fell monthly in just five major metros: the four major Florida markets and San Antonio. Appreciation of home values nationwide is fairly slow but positive over last year at 1.2%. 

Affordability is still challenging buyers. A mortgage payment on a typical home in March required about 35.3% of median household income nationwide when using a 20% down payment. That's a slight improvement over last year, but is still unaffordable. Spending more than 30% of income on housing is considered a financial burden, and a 20% down payment is a steep entry fee, coming out to about $72,000 on the typical U.S. home. 

Sellers cut prices at record rates to help bridge the gap to buyers. More than 23% of the listings on Zillow received a price cut in March, the highest share for any March since at least 2018.